Following is a selection of comments from analysts on important technical developments in the foreign exchange market:
EURO/AUSTRALIAN DOLLAR: We were bullish last week after "RSI shows bullish divergence at today's 1.6579 low - suggesting a turn higher". The rally from 1.6689 now equals the 1.6571 to 1.6773 rally and RSI on the hourly shows negative divergence at the high from today (1.6892). A decline from current levels could test the 38.2 percent fibo of 1.6571-1.6893 at 1.6770 (also 8/15 high at 1.6773).
The next support area would be the confluence of the 61.8 percent fibo / 8/15 low at 1.6690/94. The larger trend is bullish as evidenced by steadily rising oscillators on the daily. A break above 1.6892 exposes the 8/8 high at 1.6924.
EURO/CANADIAN DOLLAR: Since March, euro/Canadian dollar has formed a slightly contracting upward sloping channel. A long term resisting trendline (from the 12/23 high at 1.6702) is just above 1.4500 and should provide resistance on rallies. Within the aforementioned channel, price last bounced off of the upper end on 8/4 at 1.4587.
The bias then is for a return to the lower end of the channel in a 5th wave (a-b-c-d-e). Price is testing support at the a short term support line from the 8/11 low at 1.4241.
A break below there could then trigger the selling that takes the pair lower. Of note as well is the pair just slipping below the 20 day SMA.
EURO/NEW ZEALAND DOLLAR: The daily shows an obvious head and shoulders pattern and the pair is approaching a triple bottom (in this case also the neckline) at 1.9920. A break below there targets the 5/3 low at 1.9585.
The near term may see a bounce higher as hourly conditions are oversold and the pair is nearing minor support from the 8/16 low at 1.9966. Resistance is at today's high at 2.0121 and the 8/14 high at 2.0272.
EURO/DOLLAR: Euro/dollar following last weeks sharp sell-off from 1.2913 on August 10, the Euro is expected to remain vulnerable with further slippage likely to attract the 50 percent and 61.8 percent retracement levels of the 1.2456 to 1.2913 advance.
These are located at 1.2685 and 1.2631 respectively. 1.2913 has now been defined as primary resistance with gains over the past few days being viewed as a correction.
DOLLAR/YEN: Dollar/yen stalled at 116.76 recently, August 14 high ahead of the 76.4 percent retracement of the 117.89 to 113.97 decline. The chances of a decline have increased following this recent setback with 116.76 now defined as a key near term resistance. 115.21, yesterday's low marks the next support and trigger for further downside.
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